Pension Planning

Personal Pension Plan

Planning for retirement should start from the moment you start work, but often people delay putting aside money for retirement. It is never too late to start and with new pension freedom rules that were recently brought in, pensions have the most attractive tax advantages of all investment planning.

What is a Personal Pension?

A Personal Pension is a collective investment scheme where you or your employer or even a third party like a relative can contribute funds so that you can draw these later on in life as an income. The Personal Pension contract attracts tax relief on contributions that you make at your highest marginal rate and the fund also grows tax free. The higher the fund value you achieve the more income you will have in retirement, but if you want to retire on for example £20,000 in today’s value we estimate that will need a fund value of approximately £400,000. This can often seem an inconceivable amount of money to many, but starting early and being realistic about your saving goals is the secret to success.

How does tax relief work?

If you are a basic rate tax payer and you contribute £80 per month into a pension, the government will give your pension plan tax relief of £20 making the total contribution £100. This is effectively Basic Tax Relief at 20%.

If you are a high rate tax payer you will again pay £80 per month into a pension, the government will give your pension plan tax relief of £20 making the total contribution £100 into the pension. You will need to complete a self-assessment tax return form to get back a further £20 tax relief which represents the high rate tax relief that you would have been entitled to.

Investment Choices

There is a bewildering choice of pension plans on the market and we feel it is important that our clients have the maximum amount of choice when it comes to investment. Clients who want to have a wide range of choice could decide to choose a Self Invested Personal Pension Plan (SIPP) where you have access to thousands of managed funds. Most of our clients will not have the investment knowledge to make the correct choices and therefore we will help clients decide what funds are best suited to your attitude to risk. We take time to find out how much risk you are willing to take with your investments.

Can I have more than one pension?

Yes, you can have more than one pension and many people do accumulate various pensions over their working life. It is important that individuals update address details with preserved pensions and when seeking financial advice, you make sure that your adviser is aware of all pension plans that you hold.

Reviews

Pensions are a long term investment and it is important to review these investments on an annual basis. Investment decisions change and so do your circumstances so we offer a review service to all clients to make sure that your choices continue to be relevant and that you are on target to achieve your retirement goals.

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“Peter provides coherent, objective advice on all aspects of financial planning and his approach is refreshingly down-to-earth and jargon free. He thinks strategically and offers a service which takes into account risk profile and long-term goals, while carrying out regular reviews to assess investment performance and make any necessary portfolio adjustments. I have no hesitation in recommending him as a highly professional and effective financial advisor.” Christopher S

“Essential IFA have assisted me in both personal and business financial matters and specifically setting up a SIPP buying commercial property. From the very first contact I felt comfortable discussing such matters and his depth of knowledge gave great confidence. I would recommend Peter Herd at Essential IFA.” Ian B

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Essential IFA Ltd

Essential IFA Ltd is an appointed representative of the Whitechurch Network Ltd which is authorised and regulated by the Financial Conduct Authority (FCA). The Financial Conduct Authority may not regulate all products or services on this website. Tax planning, inheritance tax planning and will writing are not regulated by the Financial Conduct Authority. Essential IFA offers services only to investors in the UK.

The value of your investment is not guaranteed, it may go down as well as up and income from it may fluctuate and you may not get back your original investment.